Between Financial Conduct Authority (FCA) regulation and the standards set by the Equity Release Council (ERC), the equity release market provides multiple layers of protection for customers, which must continue to be built upon, according to the ERC.
Commenting on the FCA’s report into the need for more stringent efforts to ensure equity release customers are being provided with appropriate advice, David Burrowes, chairman of the ERC, said: “The FCA’s report found that equity release is ‘working well for many consumers’ by helping to meet important social needs, from boosting retirement income to funding home improvements, repairs and adaptations.
“We will continue to work with members and the wider market to make sure this is a universal characteristic, by developing and embedding best practice standards which we would like all firms to sign up.
“For context, equity release makes up fewer than 2% of complaints about home finance products and, of 38 complaints made to the Financial Ombudsman Service in the last year, only two were upheld.
The push to ensure all customers receive the right level of advice will build on the checks and balances already in place within the system, Burrows continued.
He said: “The combination of FCA regulation and Equity Release Council standards provides three levels of protection for customers, including independent legal advice alongside regulated financial advice and clear product safeguards.
“The requirement for customers to receive independent legal advice is unique among mortgages and helps to ensure customers understand the product and are under no duress or coercion to enter into the contract.”
The correct advice will take into account the long-term commitment being made, and the fact that each customer’s circumstances differ.
Burrows said: “It is vital that customers are supported to consider both long- and short-term needs when deciding whether equity release is right for them, as well as potential alternatives now and in future.
“The FCA’s findings will inform our ongoing work to support advice standards across the market.”